States Erode Power of Public-Sector Unions

A law requiring Michigan public workers to contribute 3 percent of their pay to a retirement-healthcare fund was invalidated by an appeals court, but state efforts to decrease the benefits and compensation of union workers -- as well as their right to collectively bargain -- continue to increase.

Wednesday, September 14, 2011
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Michigan's public-employee unions were relieved when an appeals court ruled in August that the state legislature cannot require members to pay 3 percent of their pay into a retirement-healthcare fund.

But that ruling does nothing to stem the tide of bills sweeping through Republican-controlled state legislatures that target public-employee unions.

Faced with dire budget deficits, lawmakers say, union members must share the financial burden and make sacrifices. However, many of the bills now in the pipeline go further and rescind collective-bargaining rights for public employees.

"There are a lot of states at different stages of legislating away collective-bargaining rights for public-sector unions," says Rebecca Givan, assistant professor at the Industrial Labor Relations School at Cornell University in Ithaca, N.Y.

Some states, such as Texas, Georgia, South Carolina, North Carolina and Virginia, are banning all collective bargaining for public employees. Others are limiting which groups can bargain or what they can bargain about.

For example, Wisconsin has narrowly defined collective bargaining so that union members cannot ask for a pay increase greater than the rate of inflation.

The Ohio legislature passed a law in March that severely limits public workers' collective-bargaining rights and substantially increases members' pension and healthcare contributions. Opponents have obtained signatures to put the issue before the voters in November.

In New Jersey, the Republican legislature in June overhauled the pension and health-benefit system, which has a $53.9 billion deficit, by substantially increasing pension contributions and health-insurance premiums, and eliminating the cost-of-living adjustment.

Public-sector unions there have filed suit in federal court, charging that the legislature unconstitutionally took away contractual benefits.

"[Public-sector] unions should be very worried," says Givan. "Most [legislatures] are claiming that unions are damaging the budget and are not affordable. But unions are willing to make concessions. ... The union measures are clearly politically driven, because they go further than money."

Most of the bills are part of a "big initiative" undertaken by Republican governors and legislatures, says Givan. And if most of the bills sound identical, it's because they are based on model legislation developed by the American Legislative Exchange Council, a nonpartisan, nonprofit organization based in Washington, that supports limited government and free markets.

"It's hard to generalize," says Marion Crain, law professor at Washington University School of Law in St. Louis. "Most of the state governments are initiating these kinds of moves out of the desire to cut their budgets."

Labor compensation and benefits are some of the "largest [budget] items. It's the logical place for them to look. It's totally predictable," Crain says.

That said, some of the laws now being passed "seem to be after more ... undermining or doing away with unions," she says. "The larger trends are pretty clear. Governments continue in belt-tightening and some are taking advantage" of budget deficits to limit unions.

There are exceptions, but it appears to have "played out" as Republican versus Democrat, Crain says. "We'll see more efforts. It'll heat up as the presidential election approaches."

In Michigan, the Court of Appeals agreed with a lower court that the state legislature violated the state constitution when it created a public-employee retirement-healthcare fund that required a 3-percent contribution.

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In doing so, the legislature circumvented the Civil Service Commission, an independent body that has constitutional authority over union compensation. 

"The people can and should expect shared sacrifice; however, it cannot come at the expense of constitutional nullification, and the Legislature cannot expect to balance the budget on the backs of state workers," writes Judge Karen Fort Hood.

Lawmakers argued the fund would help balance the budget. But public-employee unions said the fund was only created because the state Senate had failed to get the votes to rescind a 3-percent union pay raise recommended by the Civil Service Commission.

"Cutting pay would have to be negotiated in the contract, and the legislature essentially cut pay," says Ray Holman, legislative liaison for Local 6000 of the United Auto Workers, one of the unions that sued the state.

Meanwhile, union members have paid some $59 million into the retirement fund since November. The money has been kept in escrow and will be returned to members if the state doesn't appeal the ruling,  

Although the retirement healthcare fund was found unconstitutional, the legislature has taken other steps to deal with the deficit, says Robert Boonin, an attorney with Butzel Long in Ann Arbor, Mich. "The unions have been pretty cooperative. ... [Lawmakers] are trying other things to modify the system and not destroy it, so decision-makers can act responsibly and ... hopefully be less vulnerable to pressure from the labor movement."

For example, he says, the legislature has reformed teacher tenure rules, put limits on the amount employers can spend on health insurance and passed a rule that requires an arbitrator to consider the local community's ability to afford a potential police or firefighter contract.

As for the nationwide trend, says Boonin, lawmakers in most states are "trying to level the playing field at the bargaining table. It was unduly skewed in one way. The union had too much power."  

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